This is an early draft document. I am making this public so that I
can receive feedback as it is being written and make it as useful as
possible. Please send me email
if you have any thoughts.

Canadian Peer-to-peer (P2P) legal theories, proposals and
questions

Conversations in the Digital-copyright.ca discussion forum in the
last few weeks have suggested there is more than one theory about how
peer-to-peer "file-sharing" (P2P) works, what it does, and
what the meanings of terms like "upload" and "download"
are when used in the context of P2P.

I have been very vocal in my opposition to the suggestion from the
Heritage Minister that radical changes to our copyright act are
needed.

"We'll also be addressing the peer-to-peer issue,"
. "It will give the tools to companies and authors to sue."1

Whether you believe the act needs to change appears to depend on
the theory you are using to understand how P2P works, and how it
interacts with our current copyright act. There also seems to be
indication the incumbent music and recording industry want both to
require authorization as well as the right to collect royalties
("right or remuneration") for the same activities,
something that should be understood as a mutually exclusive choice
that the industry must make.

I will explore two theories of how P2P works which I have become
aware of in discussions in our forum. Hopefully this will also allow
the technical, legal and public policy community to weigh-in,
possibly promoting less confusing policies that do not encourage
radical changes to our copyright act where the intended and
unintended consequences are not adequately understood.

Theory 1: P2P as a "communication by telecommunications",
where a copy is kept by recipient.

In this theory P2P operates as a form of "communication by
telecommunications", a situation we are quite familiar with
through examples such as VCRs that allow us to make copies of things
which can be sent to the VCR over distances using wired or wireless
means. The sender of this communication would be sending something
via telecommunications (wired, wireless, broadcast or to a single
recipient), and the recipient would then be making a copy.

In this case the person sending the file is liable under 3(1)(f)
of the copyright act.

3. (1) For the purposes of this Act, "copyright",
in relation to a work, means the sole right to produce or reproduce
the work or any substantial part thereof in any material form
whatever, to perform the work or any substantial part thereof in
public or, if the work is unpublished, to publish the work or any
substantial part thereof, and includes the sole right...(f)
in the case of any literary, dramatic, musical or artistic work, to
communicate the work to the public by telecommunication,...and
to authorize any such acts.

The person receiving and storing a copy for later use would also
be liable, except in the case of "private copies" of music
under section 80 of the act. This theory does not differentiate
between "streaming" and "filesharing" as far as
the sender is concerned, which are considered different only in
whether the recipient makes/keeps a copy or whether there are only
"ephemeral" copies (temporary caches, buffers, etc).

This theory also suggests that the sender is not "distributing"
the work the way it appears to be used in the copyright act to refer
to copies. The sender is not "distributing copies" as would
be the case if they were giving away photocopies or CDs.

The question of how the contents of the file gets between the two
persons is considered important. The terms "upload" and
"download" are often used to describe the techniques
involved in transferring the file, but I am avoiding these terms as
they are being used under a different meanings that can sometimes
cause confusion.

Theory 2: P2P as simple "copying", similar to if
physical media had been loaned.

In this theory P2P operates as a method to make a copy, similar to
physical media (CD, tape, book, etc) being available to an alleged
infringer who makes unauthorized copies. The question of how the
contents of the file gets between the person with the original copy
and the person making the unauthorized copy is not considered
relevant. Whether media is provided locally or access to a file on
remote media is considered equivalent.

When discussing physical media the owner of the media who loaned
it is generally not considered liable as there is no regulation of
loaning physical media2.
This is how physical media is able to be loaned by libraries or
private citizens without authorization by a copyright holder. If the
person borrowing makes their own copy without permission, then
outside the private copying exception they would be considered
infringing.

Under this theory the person who makes the copy is the person
requesting, receiving and storing the file. The person making their
copy available remotely and instructing their computer to send the
file upon request is not considered liable for anything. The sender
is also not seen to be distributing copies, nor is a receiver who
further "shares" what they receive to other P2P users
considered to have distributed copies.

When we talk about making copies of media we don't tend to talk
about "uploading" or "downloading", just making
copies. There isn't anything we are uploading to or downloading from
regardless of which of a variety of meanings of these terms are being
used.

This theory also seems to consider it different from the senders
perspective whether they are offering a file to be copied or to be
"streamed", even though there is little or no difference
from the senders point of view and the differences are in how the
receiving software is configured.

The General Case

Taken at a higher level it can be said that there are two broad
categories of methods to get work between two people: the movement of
mechanical/fixed copies and communication by telecommunications.

The movement of copies is well understood, including infringement
generally (reproduction and authorization) and secondary infringement
(possession, distribution of unauthorized copies). As we are also
talking about physical things it is easier for people to understand
concepts such as first-sale which says that the person who buys a
copy is allowed to resell their copy as long as they have not made
any additional copies.

The concept of "communication to the public by
telecommunications" is new since 1988 in Canada, with only
"communicate by radio communication" was mentioned prior to
this. The intention at the time seems to be to expand the definition
to make it more technologically neutral and to include all types of
communication to the public by wired or wireless means, rather than
just radio.

People have had a hard time dealing with this concept in the
context of the Internet which facilitates many types of communication
in one: many-to-many, one-to-one, many-to-one, one-to-many.
Traditionally a medium only offered one such as broadcast
communication which is one-to-many or telephone which is one-to-one.

The precedent that I have been able to find3
on "communication to the public by telecommunications"
discusses broadcast style communications where all members of the
public receiving the communication receive at the same time. While
the Internet does have a similar concept with multi-cast, at a lower
level most Internet communication sends individual packets destined
to individual recipients one-at-a-time with the same data sent from
the source multiple times, one for each recipient. Whether judges
will interpret this as "communication to the public" seems
to be uncertain, and they may consider this to be some form of
one-to-one communication even though there are multiple members of
the public receiving. I believe the most technologically neutral way
to interpret the act is to consider the nature of the audience and
whether they are private communications or whether they are "to
the public", and to not worry about whether the information is
received by all recipients simultaneously or not.

When streaming protocols are being used, the question seems to
have been answered. In November 2002 the Bill C-114
was passed to address the question of Internet retransmission. It
should be clear that if these amendments were to have the desired
effect that services such as iCraveTV and JumpTV were being
considered by parliament to be retransmitting under the intended
meaning of the copyright act, which is a specific type of
"Communication to the public by telecommunication". I
believe it is quite reasonable to believe that parliament did not
intend to have some arbitrary line drawn about the timing details of
a specific communications protocol that would differentiate
multi-cast, streaming and P2P protocols as methods to communicate a
work to the public by telecommunications.

Special case of recorded music

Music copyright is harder to understand than with other types of
works. You have composers, authors and music publishers which are
copyright holders on "musical works", performers who have a
copyright on their performance, and then the copyright holders of
sound recordings. These different copyright holder have exclusive
rights relating to different activities. It matters whether a
recording of a work is seen to have been "copied",
"performed", or "communicated to the public" as
it involves different rights. When collectives are involved it also
involves different collective societies: Canadian Private Copying
Collective (CPCC) for private copying, the Canadian Musical
Reproduction Rights Agency Ltd. (CMRRA) for mechanical copies, and
the Society of Composers, Authors and Music Publishers of Canada
(SOCAN) for musical works.

As we saw when CRIA opposed the SOCAN tariff proposal for
ring-tones, the different parts of this industry are not allies but
often competitors trying to increase the money they receive and
decrease the money others receive when Canadians pay for music5.
Legacy licensing regimes are also not intuitive, for example where
the same license to SOCAN that licenses bars to play recorded music
to their patrons also licenses musicians to do covers of songs
authored by others within those bars.

If we are to see reform to copyright we should start with trying
to simplify music copyright. Unfortunately current proposals being
made by the industry and government would accomplish the opposite and
make music copyright even more complex.

Two existing exceptions to the general case for copyright exist
for recorded music which have implications for P2P. In the past it
was assumed that music was largely available in copies or
communicated via commercial radio, an assumption that is no longer
true. P2P involves both a communication by the peer that is sharing
the work, and the making of a copy by the receiver/downloader.

Section 19(1) of the Copyright Act states:

19. (1) Where a sound recording has been
published, the performer and maker are entitled, subject to section
20, to be paid equitable remuneration for its performance in public
or its communication to the public by telecommunication, except for
any retransmission.

This suggests that copyright holders are owed equitable
remuneration for the "communication to the public by
telecommunication" from those sharing music, and that this
sharing doesn't require authorization. This suggests that if P2P is
considered a "communication to the public" then those who
wish to share music could get together and appeal to the copyright
board to have tariff rates set, given it is unlikely that there would
be easy agreement between P2P users and the recording industry. Once
that rate is set, any P2P music file-sharer who pays the rate would
not be guilty of infringement for "communication to the public
by telecommunication".

That would allow them to pay a fee and share unauthorized music,
recognizing that it is a separate action to then make copies.

Section 80 (1) of the Copyright Act provides as follows:

80. (1) Subject to subsection (2), the act of
reproducing all or any substantial part of (a) a musical work
embodied in a sound recording,...onto an audio recording
medium for the private use of the person who makes the copy does not
constitute an infringement of the copyright in the musical work, the
performer's performance or the sound recording.

Section 81 then defines a right of remuneration that is levied
against manufacturers and importers of blank audio recording media.

Depending on how the specific P2P service works, this may or may
not cover the activities of the person receiving music. For
determining whether this copy is for "the private use of the
person who makes the copy" it matters whether you are sharing
your copy with others as to whether or not it could be considered
"private".

For instance, with P2P services like BitTorrent
you automatically share the parts of the file you have received
while you are receiving a file. If these parts are considered
"substantial parts" under the copyright act, I doubt that
your copy will be considered a "private copy" for the
purposes of this exception.

Moving forward with Voluntary Collective Licensing of Music File
Sharing

The United States based Electronic Frontier Foundation has
proposed a Voluntary Collective Licensing of Music File Sharing6.
I believe it should be possible to combine sections 19(1) and
section 80 of our copyright act to enable this voluntary system.
Unfortunately there would need to be amendments to the copyright act
in 80.(2) to clarify that, where
equitable remuneration has been paid, unauthorized communication to
the public by telecommunications does not change the status of a
private copy.

Which theory are different people using?

If the first theory is correct, then the current copyright act
provides more than adequate tools to most copyright holders to sue.
In most cases outside of music both the sender and the receiver would
be considered liable for unauthorized activities.

In the case of music we have copyright being replaced with a right
of remuneration, with an obvious amendment to the copyright act being
to remove this exception if the recording industry is not happy with
remuneration. It would be inappropriate to break any balance in
copyright and go the direction proposed by the recording industry
which is more rights, possibly including the right to collect
remuneration and sue for the same activities.

If the second theory is considered correct, then only the
recipient of files are considered liable. In the case of music it
depends on how you interpret private copying as to whether
unauthorized P2P sharing of music would be considered an
infringement.

While the copyright parts of the BMG case were vacated by the
appeals court, this case and the appeal serve as a view into the
thinking of these judges. At paragraph 22 of his decision7
Justice Konrad von Finckenstein wrote:

[22] They submit in paragraph 102 of their written
representations that such activity amounts to infringement of the
Copyright Act on the following grounds:

a. reproduction of sound recordings by the alleged
infringers (s. 18(1) and s. 27(1));b. authorization of the
reproduction of the sound recordings (s. 18(1) and s. 27(1));c.
distribution of unauthorized copies of the sound recordings to such
an extent as to affect prejudicially the plaintiffs (s. 27(2)(b)),
and d. possession of unauthorized copies, which the alleged
infringers knew or ought to have known were infringing, for the
purpose of distribution, as set out above (s. 27(2)(d)).

This discussion does not include the suggestion that there was
unauthorized communication by telecommunications, suggesting that the
plaintiffs (CRIA) were using a theory closer to theory 2, although
not identical as the terms "upload" and "download"
were being used. CRIA would be familiar with the case of bootleg
media being distributed, and the different wording of these
activities from the US act, and considered P2P in Canada to be an
equivalent scenario.

It is not clear to me is how the term "distribution" is
being used in Canadian situations where we are not talking about
mechanical copies. A person who sends a file from their computer to
another computer isn't "making a copy", but they are
communicating the file to a recipient who can store a copy of this
information. While the sender may not be making copies, they are
doing activities which can be seen to have the same effect but do not
seem to be considered equivalent under our act.

After quoting section 80(1) of the Copyright Act two statements
were made:

[25] Thus, downloading a song for personal use does not
amount to infringement. See Copyright Board of Canada, Private
Copying 2003-2004 decision, 12 December 2003 at page 20.

[26] No evidence was presented that the alleged
infringers either distributed or authorized the reproduction of sound
recordings. They merely placed personal copies into their shared
directories which were accessible by other computer user via a P2P
service.

The wording of paragraph 25 suggests that the judge was not
considering whether the music was being further "distributed",
"communicated" or otherwise available to a wider audience
in determining whether the "downloading" was considered as
being for personal use. If this interpretation is what was intended,
and this was left as precedent, then this would have understandably
made the recording industry upset. CRIA did not consider
"communications", there was no distribution of copies, and
any reception and storage of copies were being considered covered by
section 80(1) of the copyright act which suggested that nobody was
being held liable for any unauthorized activity.

[49] When the Motions Judge stated that, under subsection
80(1) of the Copyright Act, R.S. 1985, c. C-42, "downloading
a song for personal use does not amount to infringement," he
gave no consideration to the possible application of subsection 80(2)
and the circumstances in which the defence of "private use"
will not be available, such as, inter alia, where the
reproduction of a musical work embodied in a sound recording onto an
audio recording medium is done for the sale, rental, distribution,
communication by telecommunication or performance to the public.

80. (1) Subject to subsection
(2), the act of reproducing all or any substantial part of

(a) a musical work embodied in a
sound recording,(b) a performer's performance of a musical work
embodied in a sound recording, or(c) a sound recording in which a
musical work, or a performer's performance of a musical work, is
embodied

onto an audio recording medium
for the private use of the person who makes the copy does not
constitute an infringement of the copyright in the musical work, the
performer's performance or the sound recording.

(2) Subsection (1) does not
apply if the act described in that subsection is done for the purpose
of doing any of the following in relation to any of the things
referred to in paragraphs (1)(a) to (c):

(a) selling or renting out, or
by way of trade exposing or offering for sale or rental;(b)
distributing, whether or not for the purpose of trade;(c)
communicating to the public by telecommunication;...

[50] The Motions Judge also did not appear to consider
whether all the requirements for the application of the exemption
relating to personal use contained in subsection 80(1) of the
Copyright Act were satisfied. For example, if the users were
not using an "audio recording medium", the defence of
private copying would not be available. (See Copyright Board,
Private copying 2003-2004 (December 12, 2003) and Canada
(Canadian Private Copying Collective) v. Canadian Storage Media
Alliance, 2004 FCA 424.)

Cross-border issues

The 1995
Lehman report9,
the United States report that is seen as the source for the 1996 WIPO
treaties, uses different terminology than the Canadian act. Rather
than discussing communications to the public via telecommunications,
they instead suggest expanding the definitions of "distribution"
and "publication" in the United States Code to include
"transmission of copies" to achieve related results. While
this language doesn't entirely make sense to me, the use by others of
US language to interpret Canadian law may be part of the source of
misunderstandings.

The future?

We must strongly oppose the demands of the legacy content industry
who appear to want the ability to both levy and sue for the same
unauthorized activities.

There are different directions to go:

- Clarify status-quo: we have not yet had any court case that has
clarified the status-quo. I wonder if it would be possible to have a
mock-trial where current legal theories would be tested? I do not
know if this has been done in the past, but with the uncertainty and
the widely diverse interpretations of current law this type of thing
is needed.

- Move further down the "right of remuneration" path,
replacing any copyright for non-commercial communication and copying
of music with a levy (Geist and others have suggested this)

- Move to a free market approach. For music this would be to
remove existing "right of remuneration" for communication
to the public, allowing individual copyright holders and
repertoire-only collectives to authorize. To help facilitate
innovation in Information and Communications Technology, modify
existing private copying regime to include private
copying/communication of any type of work, require that the source be
an authorized source, and have no levy (The government and
collectives have no business in the bedrooms of the nation)

The confusion around the "making available" right part
of 1996 WIPO treaties

It has been hard to write anything on this topic without bumping
into the use of confusing language. One of the most confusing phrases
is the term "making available".

One of the easier to understand uses comes from article 8 of the
WIPO Copyright Treaty10

Article 8Right of Communication to the Public

Without prejudice to the provisions of Articles
11(1)(ii), 11bis(1)(i) and (ii), 11ter(1)(ii), 14(1)(ii) and 14bis(1)
of the Berne Convention, authors of literary and artistic works shall
enjoy the exclusive right of authorizing any communication to the
public of their works, by wire or wireless means, including the
making available to the public of their works in such a way that
members of the public may access these works from a place and at a
time individually chosen by them.

This has been seen by many as very similar to section 3(1)(f) of
our existing copyright act. Confusion and disagreement seem to come
from the question of timing. In a traditional broadcast medium such
as radio it is the broadcaster that sets the timing of when something
is communicated, where we must now include the situation when the
audience member sets the timing.

I do not understand why the timing should matter for an
interpretation of our copyright act. We have moved from over-air
broadcasts to cable/satellite with "time shifting" stations
(where the same programming is offered at different times because of
different Canadian timezones) to things such as Rogers On-Demand11.
In all these cases the sender/broadcaster can already be said to have
communicated the program and/or authorized the program to be
communicated.

What Justice Konrad von Finckenstein expressed seemed to have made
things even less clear for many people.

[27]As far as authorization is concerned, the case of CCH
Canadian Ltd. v. Law Society of Upper Canada, [2004] 1 S.C.R. 339
established that setting up the facilities that allow copying does
not amount to authorizing infringement. I cannot see a real
difference between a library that places a photocopy machine in a
room full of copyrighted material and a computer user that places a
personal copy on a shared directory linked to a P2P service. In
either case the preconditions to copying and infringement are set up
but the element of authorization is missing. As Chief Justice
McLachlin said in CCH, supra [at page 361]:

"Authorize" means to "sanction, approve
and countenance": Muzak Corp. v. Composers, Authors and
Publishers Association of Canada Ltd., [1953] 2 S.C.R. 182, at p.
193; De Tervagne v. Beloeil (Town), [1993] 3 F.C. 227
(F.C.T.D.). Countenance in the context of authorizing copyright
infringement must be understood in its strongest dictionary meaning,
namely, "give approval to, sanction, permit, favour, encourage":
see The New Shorter Oxford English Dictionary (1993), vol. 1,
at p. 526. Authorization is a question of fact that depends on the
circumstances of each particular case and can be inferred from acts
that are less than direct and positive, including a sufficient degree
of indifference: CBS Inc. v. Ames Records & Tapes Ltd.,
[1981] 2 All E.R. 812 (Ch.D.), at pp. 823-24. However, a person does
not authorize infringement by authorizing the mere use of equipment
that could be used to infringe copyright. Courts should presume that
a person who authorizes an activity does so only so far as it is in
accordance with the law: Muzak, supra. This presumption
may be rebutted if it is shown that a certain relationship or degree
of control existed between the alleged authorizer and the persons who
committed the copyright infringement: Muzak, supra; De
Tervagne, supra: see also, J. S. McKeown, Fox Canadian
Law of Copyright and Industrial Designs, 4th ed. (looseleaf), at
p. 21-104 and P. D. Hitchcock, "Home Copying and Authorization"
(1983), 67 C.P.R. (2d) 17, at pp. 29-33.

[28]The mere fact of placing a copy on a shared directory
in a computer where that copy can be accessed via a P2P service does
not amount to distribution. Before it constitutes distribution, there
must be a positive act by the owner of the shared directory, such as
sending out the copies or advertising that they are available for
copying. No such evidence was presented by the plaintiffs in this
case. They merely presented evidence that the alleged infringers made
copies available on their shared drives. The exclusive right to make
available is included in the World Intellectual Property
Organization. WIPO Performances and Phonograms Treaty, Geneva,
December 20, 1996, however that treaty has not yet been implemented
in Canada and therefore does not form part of Canadian copyright law.

This last section was interpreted to suggest that ratification of
the treaties would have removed any requirement that information be
communicated, or copies to be made or distributed. I people read far
more into what was said, with the CCH case more closely mirroring
what was already said in the WIPO treaties.

Agreed statements concerning Article 8 : It is understood
that the mere provision of physical facilities for enabling or making
a communication does not in itself amount to communication within the
meaning of this Treaty or the Berne Convention. It is further
understood that nothing in Article 8 precludes a Contracting Party
from applying Article 11bis(2).12

I believe that it is quite appropriate to consider the previous
configuration of a tool that communicate a work to be equivalent to
configuring tools that communicate immediately. I am not, however,
comfortable with considering this configuration as authorization, and
do not see anything either in the current act or the WIPO treaties
that suggest that courts should. There should be proof that at least
one unauthorized communication occurred to at least one member of the
public, possibly an investigator, before there is a claim of
infringement.

The United States is the origins of the policy that became the
1996 WIPO treaties, and is still trying to figure out this issue. A
recent decision seems to agree with the idea that there needs to be
more than proof of an offer to communicate or distribute a work for
there to be infringement. While it may surprise some to know that
there are current lawsuits relating to the original Napster, a recent
summary judgment in one case included the following:

Rather than requiring proof of the actual dissemination
of a copyrighted work or an offer to distribute that work for the
purpose of its further distribution or public performance,
plaintiffs' theory is premised on the assumption that any offer to
distribute a copyrighted work violates section 106(3). This is not
sufficient to satisfy plaintiffs' burden of proving that Napster or
its users directly infringed their copyrighted musical compositions
and sound recordings, as they must do if they are to hold defendants
secondarily liable for that infringement. Accordingly, the court
holds that defendants are entitled to summary judgment on this
issue.13

Other possibly related provisions of the 1996 WIPO treaties

The following WIPO treaty articles relate to the making and
distributing of fixed copies, which I believe does not relate to
peer-to-peer itself. I am including them here for quick reference.

WIPO Copyright treaty:

Article 6Right of Distribution

(1) Authors of literary and artistic works shall enjoy
the exclusive right of authorizing the making available to the public
of the original and copies of their works through sale or other
transfer of ownership.

(2) Nothing in this Treaty shall affect the freedom of
Contracting Parties to determine the conditions, if any, under which
the exhaustion of the right in paragraph (1) applies after the first
sale or other transfer of ownership of the original or a copy of the
work with the authorization of the author.6

See also:

Agreed statements concerning Articles 6 and 7: As used in
these Articles, the expressions "copies" and "original
and copies," being subject to the right of distribution and the
right of rental under the said Articles, refer exclusively to fixed
copies that can be put into circulation as tangible objects.

(1) Performers shall enjoy the exclusive right of
authorizing the making available to the public of the original and
copies of their performances fixed in phonograms through sale or
other transfer of ownership.

(2) Nothing in this Treaty shall affect the freedom of
Contracting Parties to determine the conditions, if any, under which
the exhaustion of the right in paragraph (1) applies after the first
sale or other transfer of ownership of the original or a copy of the
fixed performance with the authorization of the performer.7

Article 8 has the same agreed
statements as articles 7+8 of WCT.

Article 10Right of Making Available of Fixed
Performances

Performers shall enjoy the exclusive right of authorizing
the making available to the public of their performances fixed in
phonograms, by wire or wireless means, in such a way that members of
the public may access them from a place and at a time individually
chosen by them.

9Intellectual
Property and the National Information Infrastructure, The Report of
the Working Group on Intellectual Property Rights . Primarily
authored by Bruce A. Lehman, Assistant Secretary and Commissioner of
Patents and Trademarks
http://www.uspto.gov/web/offices/com/doc/ipnii/

11Rogers
On Demand is a digital service from Rogers Cable which allows an
audience member to chose a program from a menu that is then streamed
to the specific audience. The audience has the ability to use
VCR-like controls such as pause, rewind and fast-forward.
http://www.shoprogers.com/store/cable/ptv/control/ondemand.asp